When tough economic times hit, individuals wonder whether they will be able to live comfortably on their retirement income. People who do not save for retirement during their employment years may face disappointment in the quality of life during their retirement years. As a general rule, people need 60 to 80 percent of their preretirement income to maintain their present standard of living. Government benefits, such as social security benefits, provide only a portion of that retirement income. Because income from social security and employer-sponsored plans may not meet retirement income needs, individuals may supplement their social security and pension income with personal savings and investments.
However, setting aside funds into personal savings and investments is not a guarantee for success. For example, market forces beyond a person's control may adversely affect retirement savings. If negative market forces should come into play during years close to retirement, a person may find that his/her expected standard of living in retirement may be much lower than expected. In addition, there is a likelihood that individuals in such a position will not be able to make up for losses before entering retirement.